LLC - LP FAQs Back to All FAQs

What is a limited liability company?

A limited liability company (LLC) is a type of business entity that provides its owners with limited liability protection while also allowing for flexible management and pass-through taxation.

1. Limited liability means that the personal assets of the owners (also known as members) are generally protected from any business debts or legal actions taken against the LLC. This means that if the LLC were to face a lawsuit or financial difficulties, the personal assets of the owners would not typically be at risk.

2. An LLC is considered a separate legal entity from its owners, and can be owned by one or more individuals, other LLCs, corporations, or even foreign entities.

3. One of the benefits of an LLC is its flexibility in management. LLCs can be managed by the owners (known as a member-managed LLC), or by designated managers who may or may not be owners (known as a manager-managed LLC).

4. Another benefit of an LLC is pass-through taxation. This means that the profits and losses of the LLC are passed through to the individual tax returns of the owners, and the LLC itself is not subject to federal income tax. However, depending on the state where the LLC is registered, it may be subject to state-level taxes or fees.

Overall, an LLC can be an attractive option for small businesses and entrepreneurs looking for a business entity that provides limited liability protection and flexibility in management, while also offering the tax benefits of pass-through taxation.

Is this helpful? Rate It

Select Your Rating Excellent! Very Good Good Fair Poor

Get Started